This study examines whether sell-side analysts have the ability to disseminate information
consistent with anomaly prescriptions in China. I adopt 192 trading-based and accounting-based
anomaly signals to identify undervalued and overvalued stocks. Analysts tend to give more (less)
favorable recommendations and earnings forecasts to undervalued (overvalued) stocks. On
analyzing the information content, I find that analyst recommendations and earnings forecasts are
consistent with accounting-based information rather than trading-based information. Analysts
make recommendations and earnings forecasts consistent with anomalies, especially when firms
experience relatively bad firm-level information. Additionally, undervalued (overvalued) stocks
are associated with high (low) analyst coverage. The results indicate that analysts may contribute
to mitigating anomaly mispricing and improving market efficiency in China.
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